The authority’s cabinet will next week hear that action has been taken “across all areas” of the council after a £7.3 million overspend was predicted at the end of quarter one.
The quarter two financial monitoring report, by James Walton, executive director of resources, says the figure has now shrunk to £4.4m – but that more work is needed for the remainder of the year in order to balance the books by next April.
Mr Walton says the main reasons for the predicted overspend include unforeseen pressures in children’s services, commercial losses and temporary housing costs.
If no further savings can be made, the council will need to dip into its general reserves to cover the shortfall.
The report says: “The General Fund reserve at 31 March 2021 stood at £14.091m, significantly below its optimum desired balance.”
“Based on the current monitoring position, the General Fund balance would reduce significantly by year-end, to just £9.727m. This is not considered sustainable and, as stated elsewhere in the report, actions are already agreed to mitigate the overspend in-year.”
Mr Walton also warns that the end-of-year position could be even worse if the council fails to deliver planned savings.
This year’s budget included savings of £9.8m across the council, and the position at the end of quarter two is that just £4m of this is rated ‘green’, meaning there is “evidence of delivery”.
A further £1.7m is rated ‘amber’ – savings that are expected to be achieved but of which there is “no clear evidence to support the delivery as yet”. The projected overspend at the end of quarter two assumes amber rated savings will be delivered.
The remaining £4.1m is rated ‘red’ and the report assumes this will not be achieved by the end of the year.
The report says: “Managers have provided assurance that plans are in place to deliver the savings that have been categorised as amber.
“There remains a risk that these savings could impact on the outturn position for 2021/22.
“As the year progresses, these amber savings should gradually turn to green as the evidence becomes available.
“However, if the amber rated savings are not delivered as planned, the effect on the outturn position… would leave the General Fund balance at an unsustainable level.”
The report goes on to discuss the council’s capital programme, and seeks cabinet approval for £620,000 to be added to the capital budget to go towards the Pauls Moss development in Whitchurch.
The money, which will come from contributions made by housing developers under ‘section 106 agreements’, will contribute to the delivery of 71 affordable rented apartments in a supported living scheme for over-55s.
Mr Walton says the capital budget is “heavily reliant on the council generating capital receipts” by selling off assets it no longer needs.
The report says it is estimated that there will be a £3.4m surplus in this year’s capital programme to be carried forward into 2022/23 – but that the council needs to generate more capital income to fund planned projects.
Current estimates are that the council will fall £34.8m short on its capital budget for 22/23, rising to £40.9m in 23/24.
Mr Walton says the authority might need to fall back on borrowing unless more money can be freed up – and warns this would result in interest payments which would “that are not budgeted for”.
Mr Walton adds: “There is an urgent pressure to progress the disposals programmed for future years, to ensure they are realised, together with realising the revenue running cost savings from some of the properties.”
The quarter two financial monitoring report will be presented to cabinet at a meeting next Wednesday, December 1.